The energy sector has been trading sharply higher, as rising
create a sturdy tailwind for many of these integrated service and
After a frightening dip in January, that tested the 200-day
moving average, the Energy Select Sector SPDR (NYSE:
) has rocketed to new all-time highs. In fact, XLE has now
gained over four percent in the month of April and more than 13
percent since its February low.
This ETF is the largest and most heavily traded large-cap
energy index, which encapsulates 44 companies and over $10
billion in total assets.
Related: Uranium ETFs Are Coming On
Many experts discounted the potential for the energy sector
coming into 2014, as skepticism about the future of commodity
prices weighed on revenue growth prospects.
However, since the beginning of the year, the United States
Oil Fund (NYSE:
) has gained 6.12 percent and the United States Natural Gas Fund
) has jumped nearly 26 percent. Weather-related factors
have played a big role in the first quarter surge for natural gas
In addition, this sector has likely benefited from the
rotation out of high-beta growth stocks and into value-oriented
segments that are more defensive in nature. The energy
sector is the second largest allocation in the iShares S&P
500 Value ETF (NYSE:
), with more than 15 percent of the underlying holdings.
Moving forward, first quarter company earnings announcements
are going to be a key driver of price appreciation in this
Schlumberger Ltd (NYSE:
) recently reported a record first quarter profit, as demand for
its advanced energy exploration technology continues to grow.
SLB represents more than 20 percent of the MarketVectors Oil
Services ETF (NYSE:
) and is also a top component in XLE as well.
There are a number of different ETF alternatives to play the
energy sector, depending on your preference of large integrated
oil companies, master limited partnerships, or smaller equipment
and exploration names.
In addition, you have the option to
invest directly in crude oil
or natural gas prices if you believe their upward momentum will
This diversification and flexibility make ETFs an excellent
choice for those seeking exposure to the energy theme.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Free Trading Education -
Check out the free events taking place on Marketfy
this week. Spaces are limited. Sign up today.